Testing gold for stability
October 5, 2023 12:24 pmVideo
Latest News
- Analysis of GBP/USD on April 26th. The pound trades on Friday without changes April 26, 2024
- USD/JPY: Simple trading tips for novice traders on April 26th (US session) April 26, 2024
- GBP/USD: Simple trading tips for novice traders on April 26th (US session) April 26, 2024
- EUR/USD: Simple trading tips for novice traders on April 26th (US session) April 26, 2024
- GBP/USD: trading plan for the US session on April 26th (analysis of morning deals). The pound attempted, but it didn’t go April 26, 2024
- EUR/USD: trading plan for the US session on April 26th (analysis of morning deals). The euro continues to rise April 26, 2024
- Trading Signals for GOLD (XAU/USD) for April 26-29, 2024: buy above $2,324 and sell below $2,352 (21 SMA – 6/8 Murray) April 26, 2024
- Technical Analysis – AUDUSD set to complete best week of the year April 26, 2024
- Will Apple finally drop its AI hint? – Stock Markets April 26, 2024
- Bitcoin slips as markets pare back Fed rate cuts – Crypto News April 26, 2024
- EUR/USD. April 26th. Bulls continue to advance after the GDP report April 26, 2024
- Can Chinese PMIs solidify the economy’s recovery prospects? – Preview April 26, 2024
- Weekly Forex Outlook: 26/04/2024 – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too April 26, 2024
- XM’s Lombok Collaboration: Brightening Futures April 26, 2024
- Week Ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too April 26, 2024
- Market Comment – Yen keeps sinking after Bank of Japan decision April 26, 2024
- Fed faces dilemma amid sticky inflation and slowing economy – Preview April 26, 2024
- USD/JPY: trading tips for beginners for European session on April 26 April 26, 2024
- GBP/USD: trading tips for beginners for European session on April 26 April 26, 2024
- EUR/USD: trading tips for beginners for European session on April 26 April 26, 2024
Judging by the yield curve of U.S. Treasury bonds, the U.S. economy is likely approaching a pivotal moment. Long positions are accelerating in growth.
Despite continued strong selling pressure on gold, analysts have noted that the precious metal remains relatively stable amid the maximum rise in long-term U.S. bonds.
On Wednesday, the yield of 30-year bonds rose to a peak of 5%, the highest level since August 2007. At the same time, the 10-year bond yields is trading at 4.8%, which is a new 16-year high.
Despite this, gold manages to hold above the key level of $1,800 per ounce.
The rise in bond yields is creating a market environment similar to what was observed in previous recessionary periods. Events in the fourth quarter of 2023 are unfolding as a combination of events from 1987—when bond prices plummeted before the stock market crash, and 2008—when crude oil reached its peak. In 2008, the price of gold fell from $1,000 per ounce to $700, followed by rallies to $1,900.
Currently, the outflow of gold from ETFs is partly driven by the overwhelming strength of the U.S. government. And despite the potential for bond yields to continue rising, according to many analysts, it’s likely approaching a peak, especially as the U.S. labor market begins to cool down.
According to Naeem Aslam, Chief Investment Officer at Zaye Capital Markets, markets will be sensitive to disappointing economic data ahead of Friday’s Non-Farm Payrolls report. In his view, bond yields will reach a peak, even though the Federal Reserve is expected to continue its restrictive monetary policy in the near future.
Some analysts believe that since gold prices are trading near their lowest levels since early March, the yellow metal may become an attractive purchase.
Investors should also note that higher bond yields could harm the U.S. economy, and weak economic growth and persistent inflation continue to create stagflationary conditions favorable for gold.
Growing debt and geopolitical instability may make U.S. bonds less attractive to foreign investors. Additionally, there is a risk that the Federal Reserve may lose control of yields and be forced to become the lender of last resort.
There is a possibility that before the Fed begins cutting rates, it will be forced to expand its balance sheet through new rounds of quantitative easing, which would be another positive for the precious metal.
At present, the Fed is grappling with growing economic risks, and in the near future, they are unlikely to bring inflation back to the 2% target level.
The material has been provided by InstaForex Company – www.instaforex.com
Related Posts: